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Tuesday, 16 October 2012

Development of Integrated Marketing Communication Mix Strategy for HP planning to enter a new market segment (SME) in China

1. Executive Summary
This report focuses on the integrated marketing mix communication strategy of HP in the SME sector of China. It aims to focus on HP’s ‘Total Care’ campaign for the SME sector with an opportunity in the software and consulting solutions.
The first section of this report highlights the introduction to Chinese economy and HP’s strong arm in China. This is then followed by section two which includes the literature review and the Chinese market analysis as well as HP’s strengths and its opportunities in the SME sector of China.
The third part of this report focuses on the research analysis and HP’s IMC strategy for the SME sector. It includes the marketing campaign as well as the IMC mix for the SME sector while focusing on the software and consulting solutions. The next section follows the recommendations based from the Marketing Manager’s point of view.
In short, HP can capitalize on its current strengths; focus on consulting solutions and database management to the SME sector through a complete marketing mix.

2. Introduction
The Chinese market is a lucrative market for investment and over the last two decades it has attracted a lot of technological players especially the mobile industry. The economy of China is on the boom which further supports new business ventures while spreading the current ones. A marketer can start with the major cities such as Shanghai to focus it marketing communications mix strategy. HP entered the Chinese market in 1985 (China Hewlett Packard, 2010)
Hewlett Packard (HP), an American Multinational provides personal computers, software’s, technologies, solutions to Small and Medium Sized companies, government, healthcare and education sector (Hewlett-Packard, 2011).
HP’s ‘Total Care’ vision has the objective of focusing on the SME’s (Small Business Enterprises) and relying on its unique value proposition. This study focuses on its specialized integrated marketing mix communication for the SME sector while capitalizing on its operations in China, i.e. sales, marketing, research and development and service units. It can focus on HP commercial PC’s with a server database. It is crucial to understand its strengths as well as the opportunities that Chinese SME can offer.

3. Market and Literature Review
Integrated Marketing Communications (IMC) is not a new concept and has been prevalent with the brand strategy for brand equity to achieve competitive advantage (Madhavaram, Badrinarayanan & McDonald; 2005; Schultz, 1998). The speed and span of electronic media has evolved IMC, thus giving it a global perspective (Kitchen and Schultz, 2003). It received instant attraction in the 1990’s (Gurau, 2008). Grien & Gould (2010) also talk about using a global strategy interms of marketing communication mix strategy either horizontally (across countries) or vertically (across promotion disciplines). They also suggest that further research and theory is required in this area. Defining what is IMC or what it is not is not yet clear (Schultz & Kitchen, 1997). Schultz defines IMC as;

“IMC is a process though which companies accelerate returns by aligning communications objectives with corporate goals.” “IMC is a business process that is used to plan, prepare, implement, and evaluate measurable, persuasive and coordinated brand communication programs with present, perspective and targeted customer, consumers, and other internal and external audiences.”

This concept is designed to incorporate various elements of marketing mix while keeping a focus on customer centric base, maximizing impact at minimal cost (Wikipedia, 2011). Technological advancements such as internet, database applications (Gurau, 2008) mobile phones have paved way into new ways of marketing strategies (Clow & Baack, 2008) where marketers need to be geared up and make effective use of marketing channels.
IMC is a subset of the 4 marketing P’s (price, place, promotion, product) as well as includes means through which the company communicates with the current and potential customers (Articlebase, 2011)

Let’s quickly glance through the tools (Articlebase, 2011; Wikipedia, 2011) used to create integrated marketing communication mix strategy. Advertising is used to build up long term image of the product or trigger quick sales, personal selling can be used to build relationship at a later level, maybe after buying the product, sales promotion; in the form of discounts, coupons etc enhances communication and incentive which provides value to the customers, public relations to reach to a larger audience who tend to avoid salespeople and advertisements, and direct marketing such as tele-marketing, internet marketing or mails. However, following this requires defining the strategy, i.e. identifying the target audience, communication whether a new product, removing the problems etc, use the AIDA (arouse, interest, desire and action) strategy when designing the communication.
Having understood the importance of IMC, Schultz & Kitchen (1997) suggest that more evidence is required as to why IMC is better than the traditional campaigns. So this is a key area for further research to measure the effectiveness of IMC.
IMC too is not without barriers. Internal communication might require resistance to change especially when communicating to a larger audience, lack of expertise not just among managers but also the agencies could be a potential barrier (Chou, 2011).

3.1 IMC & Chinese Market
To enter into a new market, it is important to understand its business and economic dynamics. Profound changes have been brought in China since 1978 through opening-up policy (Pan, 2005). It has attracted foreign investments (He & Xie, 2009). Chinese economy has boosted in the past two decades and has been in the spotlight for international business. There is also a huge business potential (Pan, 2005) with a greater number of population to deal with. Public Relations (He & Xie, 2009) have huge potential in the Chinese market.

Having said the above, cross culture translation of the brand name or message communication is true to its global image. (Lee, 2006) China represents an extraordinary market for development both interms of economy, government support as well as the speed in which the transition is made to a full market economy. Increasing Gross Domestic Product (GDP) (IBM Consulting Services, 2005) with a real GDP growth of 9.1% in the third quarter of 2011 (Hong Kong Trade Development Council, 2011) is also an indicator to enter into this lucrative market.
With the afore-mentioned features of the Chinese market, it encourages investments within China. Multinationals like IKEA, however need to realize the culture of China, while thinking globally they need to act locally (Pan, 2005). SME’s is one market that can be tapped through integrated marketing communications using data-based marketing strategies (Chou, 2011). Chinese SME’s using customer satisfaction surveys to measure their performance and service levels (Siu & Lui, 2005). SME’s in China do not compete with the big giants; however for marketing purposes, has a lot of scope through use of online marketing communication (Gurau, 2008)

3.2 IT Brands in Chinese Market-A brief Analysis
While we look at some of the opportunity areas it’s wise to look at what generally the competitors do in the Chinese market.

If we talk about big giants in the IT industry HP is one of the biggest players. In the Chinese market they over support through differentiation strategy from their products range (HP Total Care, 2010). Its integrated marketing communication strategies are a combination of computer technology and advertising through different channels such as television direct mail and tele-marketing (HP, 2011). HP enjoys a strong marketing position in China since 2010, and a reputable brand name, however lack significant software products or consulting solutions. It has an opportunity to work on the cloud marketing through multi-global databases, can boost 30% of the server market too. It can also launch photo printing services in this market. Competitive edge is that it has a well-coordinated IMC department (Marketing Teacher-Hewlett Packard, 2010).

Dell’s strategy is continuous flow of information through direct business model in providing direct and continuous feedback from customers, therefore allowing the customer’s to build products what suits them. It has stores, kiosks and online purchase of products while acting on customer behavior. It also focuses on promotions such as; free shipping, upgrades, discounts on products. Other channels include; e-mail marketing (Chaffey, 2008). Dell Inc. is the global market leader in personal computers with a mission to provide high quality personal computers for homes and businesses. They focus on customer wishes (Dell, 2011).
The Chinese computer market made waves by buying IBM's $11 billion PC business (Business week, 2006). So, local competition is fierce too. Other players include Lenovo, inspiron etc.
The challenge would be to focus the IMC towards the specific market such as the SME.

4. Research Methodology
China maintains a high economic, health and social status. It is becoming one of the most prestigious countries for newer markets. HP enjoys a string position in this country as well.

This report relies mostly on secondary data available on the internet, research publications on HP, SME and China. Literature review also helps in developing a conceptual framework for this research. However, interviews from 10 different SME representatives were carried out to understand their requirements. One of the major needs that came up was maintaining their customer loyalty base and consulting in this area, however, the budget constraints do not allow them to purchase expensive software’s.
Time and budget were the major constraints in carrying out this report as more respondents could be interviewed to explore this case further to get in-depth analysis of the IMC strategy.

5. Analysis & Discussion
In order to develop an integrated marketing communication mix strategy for HP in Chinese SME markets it is important to review some of the characteristics of the Chinese market and its SME sector.

China has experienced a rapid growth in very short period of time. It attracts investments from large corporations as well as encourages SME’s. Looking at the GDP growth of the country (9.1% in third quarter of 2011), it has become the regional centre for trade and business. It too has attracted SME cluster to join the industry chain. Technological SME’s have also merged with the technological advancements in China (Xihui & Dongyue, 2005). These technological SME’s play a vital role in the development of the country’s economy. However, SME’s in China were encouraged greatly during the 1997 financial crunch and do not have a lot of budget to invest in expensive technologies. SME’s usually capitalize on customer loyalty through multi channel information and resources (Acxiom, 2011)

HP, a major technology giant, has been in China for over three decades and enjoys the strongest position since April 2010. A Competitive edge that it has over its competitors is that it offers a wide array of products and services with its strong financial arm as compared to Dell which has had its highs and lows but still strong to offer special marketing mix for different countries and specialized services. It has a well coordinated integrated marketing communications department and focuses on various marketing mixes such as advertising, direct marketing, television and print ads, computer intelligence terminals, tele-conferencing facilities and a feedback mechanism from its big clients in the government, health etc sectors.
It, however, has an opportunity in the software and consulting to the SME sector, which is a gap that was identified while offering customized solutions through their broad array of PC products and services.

HP’s ‘Total Care’ strategy focuses on the SME sector, which poses a lot of opportunities for its business.

Being the Marketing Manager of HP Asian Cluster, it is suggested that for Chinese SME’s it can customize its marketing campaign tailored to SME “Software and Consulting Solutions Specialized for SME’s within your reach”. SME’s usually don’t have big budgets to buy expensive software’s like Multinationals to say maintain the customer database etc. if they are able to get these services through ‘Total Care’ especially the technology SME’s.

Let’s now take a look at a viable integrated marketing mix communication strategy. We can capitalize on its current IMC for SME software and consulting solutions, thus expanding its portfolio in this sector. A well coordinated advertising through print ads, industry specific magazines, online marketing, direct marketing, database expertise through cloud marketing along with the event based marketing to educate and attract more SME’s. Also, hold specific conferences on the products and services specifically targeted towards this sector; encourage the audience to open up with their software requirements so that customized approach could be used as well as consulting solutions. Dell offers customized PC’s to its customers which Total Care can capitalize by offering customized software’s and consulting solutions to the SME’s at affordable rates. In this marketing mix, trade coupons can also be incorporated through a well-designed network of print ads, newspaper. HP should continue with the mix of customer feedback followed after the week of service for this sector as Chinese economy encourages this sector development along with strategic alliances with specialized agencies to capitalize on this opportunity. Since the SME’s rely heavily on customer loyalty, it can focus on database management services to them.

6. Conclusion & Recommendations
Being the marketing manager of HP Asia and focusing on the strong market of China, given below are some of the recommendations for HP in China.
• While Total Care focuses on SME sector, it has the opportunity to focus on Customized Software’s and Consulting Solution.

• HP should aim to strategize its integrated marketing communication mix by capitalizing on the SME sector especially through organizing events and trade promotions as well as the current IMC it has which has made it a strong player in the Chinese market.

• To support the customized requirements of the customers it can capitalize on strategic alliances with specialized agencies.
Therefore, there are still some untapped areas which HP has realized in the SME sector and further its expertise in the areas of customized software’s and consulting services. Using the current IMC along with organizing educational seminars could be an added advantage especially in the developed economy like China.